Ocean Garden Products Incorporated v. Blessings Incorporated

District Court, D. Arizona·Decided October 25, 2019·No. 4:18-cv-00322·Unknown

Opinion

1 WO 2 3 4 5

9 Ocean Garden Products Incorporated, No. CV-18-00322-TUC-RM

10 Plaintiff, Consolidated with: No. CV-19-00284-TUC-RM 11 v.

12 Blessings Incorporated, et al., ORDER

13 Defendants. 14 15 Pending before the Court is a Rule 12(b)(2) Motion to Dismiss (“MTD”) filed by 16 Pacific Ocean Harvest, S. De R.L. De C.V. (“Pacific Ocean”) (Doc. 157.)1 17 I. Background 18 This litigation began in July 2018, when Plaintiff Ocean Garden Products, Inc. 19 (“OG”) initiated a lawsuit against Blessings, Inc. (“Blessings”) and David Mayorquin 20 (“David”) in case number CV-18-322. (Doc. 1.) OG later initiated a separate lawsuit 21 alleging claims under Arizona’s Uniform Fraudulent Trade Act (“UFTA”) against 22 numerous defendants, including Pacific Ocean, in case number CV-19-284. (Doc. 1 in 23 CV-19-284) (the “UFTA Action”). After case numbers CV-18-322 and CV-19-284 were 24 consolidated, OG filed a First Amended Complaint in the UFTA Action (“UFTA FAC”), 25 the operative pleading with respect to Pacific Ocean. (Doc. 154.) 26 On July 9, 2019, Pacific Ocean filed the pending MTD (Doc. 157), which was 27 directed at OG’s original UFTA Complaint but which the parties appear to agree may be

28 1 All record citations herein refer to the page numbers generated by the Court’s electronic filing system and, unless otherwise noted, the docket in CV-18-322. 1 treated as seeking dismissal of the claims asserted against Pacific Ocean in the UFTA 2 FAC. (See Doc. 196 at 3 n.1; see also Doc. 186 at 4; see generally Doc. 187.) The MTD 3 was fully briefed on August 26, 2019. (Docs. 187, 196.) The Court held oral argument 4 on September 16, 2019, and took the matter under advisement. (Doc. 215.) 5 II. Allegations of UFTA FAC Concerning Pacific Ocean 6 OG’s UFTA FAC makes the following allegations with respect to Pacific Ocean: 7 At a time when Blessings was in serious financial distress and facing an existential 8 threat from a criminal investigation, David and his brother Abraham Mayorquin 9 (“Abraham”) ran up Blessings’ debt to OG and transferred millions of dollars—in 10 addition to equipment and intangible assets—from Blessings to a Mexican company 11 called ADAB Ocean Harvest, S. De R.L. De C.V. (“ADAB Mexico”), thereby isolating 12 the debts of their shrimp business in Blessings and the assets in ADAB Mexico. (Doc. 13 154 at 2, 5-10.) David and Abraham later set up Pacific Ocean in Nogales to take over 14 the business of ADAB Mexico (shrimp processing); they also set up a company called 15 ADAB Ocean Harvest LLC (“ADAB Tucson”) in Arizona to take over the business of 16 Blessings (shrimp sales). (Id. at 2, 13-14.) 17 Pacific Mexico now processes shrimp from a building formerly occupied by 18 ADAB Mexico in Nogales, Mexico, using ADAB Mexico’s equipment, which ADAB 19 Mexico received through fraudulent transfers from Blessings. (Doc. 154 at 14.) Pacific 20 Ocean uses the equipment based on an insider lease negotiated by David and Abraham. 21 (Id. at 14-15.) ADAB Mexico did not receive reasonably equivalent value in exchange 22 for the equipment lease, and Pacific Mexico did not enter into the lease in good faith. (Id. 23 at 17-18.) Abraham is the 99% owner of Pacific Ocean, but in reality David is still an 24 equitable owner and shares in revenues funneled from ADAB Tucson to ADAB Mexico 25 and Pacific Ocean. (Id. at 14-15.) Due to the Mayorquin brothers’ “cross-border 26 corporate shell game, Blessings is insolvent and judgment-proof” while ADAB Mexico 27 and Pacific Ocean are operational “primarily thanks to the millions of dollars” transferred 28 from Blessings. (Id. at 2.) Although Pacific Mexico is a Mexican entity with premises in 1 Nogales, Mexico, jurisdiction over it is proper because it is not a good-faith transferee of 2 assets fraudulently transferred to it from Blessings via ADAB Mexico. (Id. at 3-4.) 3 III. Legal Standard 4 “Federal courts apply state law to determine the bounds of their jurisdiction over a 5 party.” Williams v. Yamaha Motor Co., 851 F.3d 1015, 1020 (9th Cir. 2017). Arizona’s 6 long-arm statute permits the exercise of jurisdiction to the full extent permissible under 7 the United States Constitution. Ariz. R. Civ. P. 4.2(a); Davis v. Metro Prod., Inc., 885 8 F.2d 515, 520 (9th Cir. 1989). In order for the exercise of personal jurisdiction over an 9 out-of-state defendant to comport with the requirements of due process under the United 10 States Constitution, the defendant must “have certain minimum contacts” with the forum 11 state “such that the maintenance of the suit does not offend traditional notions of fair play 12 and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal 13 quotation omitted). 14 The plaintiff bears the burden of establishing that the exercise of personal 15 jurisdiction is proper. Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015). This is 16 true even though the defendant is the moving party on a Rule 12(b)(2) motion to dismiss. 17 Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002). But in the 18 absence of an evidentiary hearing, the plaintiff need only make “a prima facie showing of 19 personal jurisdiction.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 20 (9th Cir. 2004) (internal quotation omitted).2 21 Personal jurisdiction can be general or specific. General personal jurisdiction 22 exists when the defendant’s affiliations with the forum state are so “continuous and 23 systematic” that the defendant can properly be said to be “at home” in that state. 24 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal 25 quotation omitted). A corporate defendant is typically “at home” only in its state of 26 incorporation and the state in which it has its principal place of business. See id. at 924. 27 2 The plaintiff must later establish the jurisdictional facts by a preponderance of the 28 evidence at a preliminary hearing or at trial. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). 1 Specific personal jurisdiction exists only when “the defendant’s suit-related conduct . . . 2 create[s] a substantial connection with the forum State.” Walden v. Fiore, 571 U.S. 277, 3 284 (2014). Three requirements must be satisfied for a court to exercise specific personal 4 jurisdiction over a non-resident defendant: (1) the defendant must have “purposefully 5 direct[ed] his activities or consummate[d] some transaction with the forum or resident 6 thereof” or “purposefully avail[ed itself] of the privileges of conducting activities in the 7 forum, thereby invoking the benefits and protections of its laws”; (2) the claim must have 8 arisen out of or relate to the defendant’s forum-related activities; and (3) “the exercise of 9 jurisdiction must comport with fair play and substantial justice, i.e. it must be 10 reasonable.” Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).

Free access — add to your briefcase to read the full text and ask questions with AI

Ocean Garden Products Incorporated v. Blessings Incorporated, (D. Ariz. 2019).

Ocean Garden Products Incorporated v. Blessings Incorporated (Ocean Garden Products Incorporated v. Blessings Incorporated) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

International Shoe Co. v. Washington
326 U.S. 310 (Supreme Court, 1945)
Foman v. Davis
371 U.S. 178 (Supreme Court, 1962)
Calder v. Jones
465 U.S. 783 (Supreme Court, 1984)
Goodyear Dunlop Tires Operations, S. A. v. Brown
131 S. Ct. 2846 (Supreme Court, 2011)
Daimler AG v. Bauman
134 S. Ct. 746 (Supreme Court, 2014)
Walden v. Fiore
134 S. Ct. 1115 (Supreme Court, 2014)
Loredana Ranza v. Nike, Inc.
793 F.3d 1059 (Ninth Circuit, 2015)
George Williams v. Yamaha Motor Corp. USA
851 F.3d 1015 (Ninth Circuit, 2017)
Doe v. Unocal Corp.
248 F.3d 915 (Ninth Circuit, 2001)
Dole Food Co. v. Watts
303 F.3d 1104 (Ninth Circuit, 2002)
Schwarzenegger v. Fred Martin Motor Co.
374 F.3d 797 (Ninth Circuit, 2004)